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Bull of the Day: Cloud Peak Energy (CLD)

Finally this hard fought election has come to an end. With it, the Hillary trade is over. So that means that stocks that took a punch heading into November have a good chance of rebounding. That’s why you saw a sharp rally in stocks in industries like raw materials and construction. But the pro-Trump trade now is being especially beneficial to coal companies like today’s Bull of the Day.

Cloud Peak Energy (CLD - Free Report) produces coal in the Powder River Basin in the United States. The company operates through Owned and Operated Mines, and Logistics and Related Activities. It owns and operates three surface coal mines comprising the Antelope Mine and the Cordero Rojo Mine located in Wyoming, and the Spring Creek Mine located in Montana. These mines produce subbituminous thermal coal with low sulfur content. The company sells its coal primarily to domestic and foreign electric utilities. As of December 31, 2015, it controlled approximately 1.1 billion tons of proven and probable reserves.

The stock was a Zacks Rank #1 (Strong Buy) heading into the election and should catch even more positive news following Trump’s victory. A big reason for the Zacks Rank is three analysts have increased their earnings estimates for next year. The bullish sentiment has push up our Zacks Consensus Estimate from a 74 cent loss to a 6 cent gain. That’s a huge swing in a very short amount of time.

That bullish sentiment has been met with a huge rally in the stock. Taking a quick look at the stock chart, you can see that shares have gone from $2 in July to nearly $8 during yesterday’s trading session. All the while, shares have consistently remained above the 50-day moving average. The last “Buy” signal coming from the Commodity Channel Index occurred in late October with the CCI crossing up through the zero line after being well oversold below -100. The large gap in yesterday’s trading does run the risk of getting filled should profit-takers enter the equation in the short term.

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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25% per year. These returns cover a period from 1988-2017. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zack Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

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